With the challenges of fluctuating exchange rates and a slowdown in the global economy, the country’s online travel industry is putting its energies together to make the best of the situation.
Travel companies like MakeMyTrip, which posted a steep fall in their profit in the last quarter, are hopeful that what they lost in inbound would be balanced out by the domestic and outbound traveller as per a report in Business Standard by Ruchika Chitravanshi.
“Source markets are not doing well. The general economic environment has not been very positive. It is the domestic tourism market which will bring reprieve to the travel industry in the coming year,” said P R Srinivas, senior director, Deloitte.
While MakeMyTrip saw a fall in its profit for the quarter ended December 31 to $0.04 million, from $1.6 million in the same last year . It attributed the loss to employee-based compensation cost given in the form of stock options. The company’s net finance income decreased from $1.2 million to $0.2 million due to a fall in the rupee.
“There is no slowdown on the demand side. If the rupee depreciation continues, travelling might get expensive but people would go for holidays still, maybe shorter vacations or cheaper destinations,” said Rajesh Magow, chief financial officer and co-founder, MakeMyTrip.com.
Other online travel agencies like Expedia and Yatra.com have claimed to have seen a fair growth last quarter in spite the market conditions. Moving forward, the companies are expecting the European crisis will be a downer for inbound travel and the rupee depreciation will make many western countries an expensive option. “The main growth is going to be from the outbound sector to southeast Asia. Besides, the domestic travel is booming and will help us achieve our targets,” said Vikram Malhi, country head, Expedia. Malhi also said that the company is investing in advertising and marketing to grow its business in India.
Another trend to continue is the downgrading which would keep the cash registers ringing. “Those who may be planning to go to US may downgrade to eastern Europe. People planning a trip there would rather spend less and go to southeast Asia. But the appetite would remain,” Malhi noted.
A senior analyst said, while challenges for the whole travel industry remained the same, the online medium had an advantage over the brick and mortar companies. “Online transactions are on a rise. People are much comfortable planning their travel on one of these portals than go to a travel company’s office. Online travel agencies have only to gain from this even with all the other challenges,” he added.